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Home My WebLink About5G - Auditing Services STAFF AGENDA REPORT ~INNESO~~ ETINGDATE: AGENDA #: PREPARED BY: AGENDA ITEM: SEPTEMBER 21, 1998 5G RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF RESOLUTION 98-XX APPROVING THE OPTION OF EXTENDING AUDITING SERVICES TO ABDO, ABDO, EICK & MEYERS FOR AUDIT YEARS 1998, 1999 AND 2000. DISCUSSION: The City's accounting firm of Abdo, Abdo, Eick & Meyers has submitted a proposal for audit services for the years 1998, 1999 and 2000 in compliance with the city option of continuing their services as provided within the original Audit RFP. History Approximately three years ago on July 17, 1995 the City Council approved Resolution 95-61 which authorized the engagement of the Abdo, Abdo, Eick and Meyers Company to provide auditing services for 1995, 1996 and 1997 plus an option for 1998-2000, The cost for their professional services to prepare the comprehensive annual financial reports for these years was $9700, $9880 and $10,260 respectively, Current Circumstances Attached to your agenda report is a proposal which sets forth the scope of their services according to GAAP (generally accepted auditing standards and the Government Auditing Standards. Their proposed fee schedule for the three year period is outlined below: Annual $ Annual % Year Audit Fee Increase Increase 1998 $10,560 $300 2.84% 1999 $10,885 $325 3.08% 2000 $11,215 $330 3.03% It is important to maintain a degree of continuity when selecting an accounting firm to prepare the financial audit because of the significant amount of time necessary for the firm to be brought up to speed on the internal operating procedures of the City and for them to become familiar as to the location of all the information i,e, files, contract documents, minutes, resolutions etc. necessary during the course of their examination of the City's transactions. As a result, the process this past year was considerably faster and more efficient 16200 ~9t~~~ftA~i. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: H:\AUDIT\AUDPRO.DOC than the first two years. This was the reason that the city incorporated an option within the original request for proposals, It is Staffs opinion that the firm has done a very good job in putting together the financial report which has been in total compliance with State of Minnesota review qualifications. Also, Gerry Eick has been very helpful in completing the TIP reporting forms which have become more and more complex and difficult to administer. The proposed cost for 1998 is very reasonable and is still actually within $60.00 of the next lowest bid that was received three years ago, As indicated within their proposal the City has the right to terminate services at any time for any reason. The following alternatives are available to the City Council: 1. Approve Resolution 98-XX, as part of the consent agenda, Approving The Option Of Extending Auditing Services To Abdo, Abdo, Eick & Meyers For Audit Years 1998, 1999 And 2000. 2. Reject the proposal for a specific Council reason. roval of Resolution 98-XX Approving uditing Services To Abdo, Abdo, Eick & . 98, 1999 And 2000. do, ck & Meyers' Proposal for Audit Services for the ake for the Years December 31, 1998, 1999 and 2000. RESOLUTION 98-XX RESOLUTION APPROVING THE OPTION OF EXTENDING AUDITING SERVICES TO ABDO, ABDO, EICK & MEYERS FOR AUDIT YEARS 1998, 1999 AND 2000 MOTION BY: SECOND BY: WHEREAS, The City of Prior Lake has the option of extending the contract for audit services for a period of three more years; and WHEREAS, The certified public accountant firm of Abdo, Abdo, Eick and Meyers has been instrumental in improving the administrative controls of the City's financial operation; and WHEREAS, The financial reports of the City of Prior Lake's fiscal condition has resulted in an unqualified opinion for the past three years; and ' WHEREAS, The proposed annual cost for such audit services over the next three years is determined to be reasonable and cost effective. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that the City of Prior Lake hereby exercises its option to engage Abdo, Abdo, Eick and Meyers to perform the audit services for the following years and cost: Year Audit Fee 1998 $10,560,00 1999 $10,885,00 2000 $11,215,00 Passed and adopted this 21st day of September, 1998. YES NO Mader Kedrowski Petersen Schenck Wuellner Mader Kedrowski Petersen Schenck Wuellner City Manager City of Prior Lake 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER {Seal} H:IRESIRES98XXDOC PROPOSAL FOR AUDIT SERVICES FOR THE CITY OF PRIOR LAKE, MINNESOTA. FOR THE YEARS DECEMBER 31, 1998, 1999 AND 2000 (. )~;'~'Q'~~ABDO J)}'L ":! ,- ';fJ.,." .1 ~':,\ iJI~ABDO . ,'5",~,7j,. tljEICK & K\l~~~ MEYERS LLP Certified Pub/ic Accountants & Consultants September 4, 1998 115 East Hickory Street Suite 302 P.O. Box 3166 Mankato, MN 56002-3166 Mayor and Council Members City of Prior Lake Prior Lake, Minnesota The following sets forth the engagement of our services for the certified audit of the accounts of the City of Prior Lake. We will audit the general purpose financial statements of the City of Prior Lake for the years ending December 31, 1998, 1999 and 2000 in accordance with generally accept~d auditing standards and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our audit will include tests of the accounting records and other procedures we consider necessary to enable us to express an opinion that the financtal statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles, An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that a material misstatement may exist and not be detected by us, In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. We will perform the auditing services discussed above for the calendar years 1998, 1999 and 2000, If at any time during this period the Council is dissatisfied with our services for any reason whatsoever, our services may be terminated by so informing us, Our firm, however, shall be obligated at your continuing discretion to perform the audit services for the three-year period at the following fees: Audit Year Fee* 1998 $ 10,560 1999 $ 10,885 2000 $ 11,215 507.625.2727 . Fax 507.388.9139 ~ I P1~1, r'1~~ City of Prior Lake September 4, 1998 Page Two * Our fee for services quoted is a "not to exceed" fee. You will be billed at our normal per diem rates and in all cases will not exceed the schedule fees, which include out-of-pocket expenses. * Our fee is all inclusive. That is, includes the City audit, the Management Advisory Letter, and general consultation relating to the audit. Other services beyond the scope of the basic audit service include preparation of the Office of the State Auditor TIF reporting forms, These forms can be completed for an additional cost of $750, It is our belief that the proposed three-year audit engagem~pt is in the best interest of the City of Prior Lake, Our firm can provide the City with a fixed three-year fee schedule to facilitate the budgeting process. Further, our ability to provide meaningful assistance through our Management Advisory Letter will improve with each year of continued audit involvement. Abdo, Abdo, Eick & Meyers maintains offices in Owatonna, Mankato and Edina with a total professional staff of twenty-five accountants. Our firm utilizes computer systems for fieldwork and serving client needs in the data processing field, These systems have improved our ability to audit ~lients who have computer systems and greatly extends our capacity for evaluating client computer programs and identifying new applications for computer service, It is the policy of our firm to issue a Management Advisory Letter. As independent auditors, we are in a position to acquire a detailed knowledge of client financial and administrative procedures; the Advisory Letter serves to summarize our recommendations toward improving the accounting and administrative controls, strengthening [mancial structure and developing a more efficient business operation. Abdo, Abdo, Eick & Meyers recognizes that its most important product is prompt and effective service of the highest quality. We will serve the City to its complete satisfaction and will apply the highest level of skills available in our firm to that end. Sincerely, ABDO, ABDO, EICK & MEYERS, L.L.P. Certified Public Accountants hJ~ Gerald W. Eick, CPA Mankato Office